World Economy

UAE’s First Alumina Refinery to Cost $3b

UAE’s First Alumina Refinery to Cost $3bUAE’s First Alumina Refinery to Cost $3b

State-owned Emirates Global Aluminum (EGA) plans to spend $3 billion to build the UAE’s first alumina refinery in Abu Dhabi, chief executive Abdulla Kalban has said.

Feasibility studies have been completed and the refinery will be operational by the end of 2017, Reuters quoted Kalban as telling reporters.

Alumina, extracted from bauxite in the refining process, is used to produce primary aluminum.

“We are building the refinery to secure our own important materials,” Kalban said, adding that the refinery would produce 2 million tons of alumina annually in an initial phase and an additional 2 million tons in a second phase.

Emirates Global Aluminum, which has an enterprise value of about $15 billion, was formed by the merger last year of Abu Dhabi’s Emirates Aluminum (Emal) and Dubai Aluminum (Dubal).

Aluminum production in the Persian Gulf has been rising rapidly, partly because of the region’s low energy costs and extensive port facilities, as well as its booming construction industry. The UAE is keen to diversify its economy beyond oil.

Emirates Global Aluminum currently produces 2.4 million tons of aluminum products per year.

The UAE accounts for about 50 percent of the Persian Gulf’s annual aluminum production of 5 million tons and is the world’s fourth largest producer of the metal, he said.

He predicted that Emirates Global Aluminum would boost its production by only about 200,000 tons over the next six years, but said the outlook for rising demand was solid. About 90 percent of the UAE’s aluminum production is exported to 68 countries.

“Global demand growth is forecast to sustain at about 5.8 percent per year till 2020, so we are confident about demand.”

The alumina refinery will be financed through a combination of equity and debt, Kalban added without elaborating.

Emirates Global Aluminum owns bauxite producer Guinea Alumina Corporation in Guinea and a 45 percent stake in bauxite miner Cameroon Alumina. “We are looking at further international expansion,” he said, declining to provide details.

Also on Tuesday, Aluminum Bahrain said it had received approval from the Bahraini government for the gas allocation needed to support its planned sixth production line, which is expected to start operating in 2018.